New fund takes the fight to climate change and carbon footprints
Horizon ETFs’ new fund can give investors the opportunity to help fight against climate change, according to its president and CEO.
Steve Hawkins believes the Horizons Global Sustainability Leaders Index (ETHI), which is now trading on the TSX, can meet the demand of investors who want to align their portfolios with their social ideals.
He said this is especially true of millennials and women and backed the ETF, the firm’s first foray into responsible investing, to prove that “being good is good for business”.
He told WP: “You’re empowering companies that are benefitting the world to do more while holding back investments from companies that have a net negative impact.
“But in terms of what’s in it for them, on the whole, companies that are SRI-aligned and pursue greater corporate social responsibility are less likely to be vulnerable to boycotts, regulatory fines and labour disputes.”
The fund is tethered to the Nasdaq Future Global Sustainability Leaders Index and seeks to replicate the benchmark’s performance net of expenses. Horizons said it will provide exposure to 100 of the world’s largest companies, based on market capitalization, with a commitment to environmentally sustainable business practices through a SRI-screened passive portfolio with a genuinely low carbon footprint.
Hawkins dismissed the idea that being a socially responsible investor means accepting less returns.
He said: “I’d say [that theory] has been debunked – there’s plenty of evidence that has shown SRI portfolio approaches can match and even outperform traditional, non-ethically guided investing methods, and are typically less volatile too.
“ETHI’s holdings are industry sustainability leaders but they’re also the world’s largest, in terms of market-cap, companies that are leading in the fight against climate change. With more mature, established companies, there’s an expectation of even less volatility and strong performance.”
Horizons admits that part of their general ETF roster is filled by companies in oil and gold but Hawkins said the new fund is about providing investors with more of an environmental conscience the chance to put their money behind their beliefs. He added that this is unlikely to be the only SRI-focused fund Horizons provide going forward.
He said: “We’re about empowering traders to invest in the way that they want and for many of them, doing it in a low-carbon way is important. Like other fund providers, we do offer ETFs that provide exposure to extractive industries like oil and gold but we recognize there are investors that those funds will never be an option for.
“That’s who ETHI is for. ETHI’s screen will only include companies with a carbon footprint 60% lower than their industry average or are working to reduce carbon emissions in other industries. That is an important issue for many investors and for our planet. We’re happy to give investors an opportunity to help in the fight against climate change.”
